GATX (NYSE:GATX) Q4 2025 Earnings call February 19, 2026 11:00 AM ET Speaker6Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the GATX 2025 fourth quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephon ...

Company Overview - GATX has been in business for 127 years, primarily as a railcar leasing company based in Chicago [1] - The company has a significant presence in North America, with plans to become the largest railcar leasing company following the acquisition of Wells Fargo Rail [1] Fleet and Operations - GATX operates a large fleet in Europe, consisting of approximately 35,000 railcars, and around 12,000 railcars in India [2] - The company also has a substantial aircraft engine leasing business, which originated from its historical involvement in aircraft leasing [2] - GATX maintains a joint venture with Rolls-Royce for engine leasing, which remains a crucial part of its operations today [2]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $82.2 million or $2.25 per diluted share, compared to $89 million or $2.43 per diluted share in Q3 2024, reflecting a decrease in earnings [2][3] - Year-to-date 2025 net income was $236.3 million or $6.46 per diluted share, an increase from $207.7 million or $5.68 per diluted share for the same period in 2024 [3][4] - The 2025 results included a net positive impact of $5.3 million or $0.15 per diluted share from tax adjustments, while 2024 results had a net negative impact of $9.9 million or $0.27 per diluted share from tax adjustments [3][4] Business Segment Data and Key Metrics Changes - In North America, fleet utilization remained high at 98.9% with a renewal success rate of 87.1%, and renewal lease rates increased by 22.8% for the quarter [4][6] - GATX Rail Europe's fleet utilization was 93.7%, reflecting ongoing market challenges, but lease renewals were at rates higher than expiring leases [6][7] - In India, fleet utilization was maintained at 100% with strong demand for railcars, and the company took delivery of 600 new cars during the quarter [7][8] Market Data and Key Metrics Changes - The North American secondary market showed strong demand for GATX assets, generating over $60 million in remarketing income during the quarter [5][6] - The company expects to finish the year with a strong fourth quarter, supported by a robust pipeline of assets for sale [10][11] - The company anticipates closing the acquisition of Wells Fargo's rail operating lease assets in the first quarter of 2026 or sooner [6][8] Company Strategy and Development Direction - The company continues to focus on increasing renewal lease rates and extending lease terms, with a positive outlook on the secondary market [4][10] - The acquisition of DB Cargo's railcars is viewed as a long-term investment to grow the European fleet, with expectations for future opportunities across Europe [7][24] - The company plans to adjust sales incentives in North American Rail to maximize value, especially with the anticipated expansion from the Wells Fargo transaction [77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the North American railcar market despite macro uncertainties, with lease rates remaining healthy [28][29] - The company expects full-year earnings guidance for 2025 to be in the range of $8.50-$8.90 per diluted share, excluding impacts from tax adjustments and the Wells Fargo transaction [8] - Management noted that the supply side of the market has been rationalized, and they do not foresee a significant increase in new car builds without a spike in demand [45][46] Other Important Information - The company identified attractive opportunities to increase direct investment in aircraft spare engines, acquiring seven additional engines for $147.1 million during the quarter [7][8] - The RRPF affiliates have expanded their portfolios, with total investment exceeding $1 billion year-to-date [8][49] Q&A Session Summary Question: How does the company plan to close the gap on revenue and margin drivers for Q4? - Management indicated strong demand in the secondary market and expects solid remarketing income to be the biggest driver in Q4 [10][11] Question: Will remarketing levels remain elevated in the coming years? - Management expressed confidence that the secondary market will remain strong, supported by a balanced supply and demand dynamic [12][13] Question: Can you clarify the financial impact of the Wells Fargo deal? - Management explained that the pro forma historic financials do not account for synergies and management fees, which will be clarified post-transaction [18][20] Question: What is the outlook for the DB Cargo deal? - Management stated that it is a long-term investment and not expected to be materially accretive in the first year [24][25] Question: How are lease rates performing in the North American market? - Management noted that lease rates remain healthy, with only slight quarter-over-quarter changes, and the market is not overbuilt [28][29] Question: What is the outlook for maintenance expenses in North America? - Management indicated that maintenance expenses have increased due to volume and mix, but they are on track to control costs through in-house capabilities [35][36] Question: Is there any hesitancy from customers regarding engine leasing? - Management reported strong demand for engine leasing and no signs of hesitancy from customers [48][49]

Business Overview - GATX has a long history of over 125 years in the railcar leasing business [8, 9] - As of December 31, 2024, GATX's assets totaled $123 billion, including approximately 152,000 wholly-owned railcars worldwide [9] - GATX operates through four main business segments: Rail North America, Rail International, Engine Leasing, and Trifleet [11] - GATX's Rail North America manages a fleet of over 111,300 railcars [12] - GATX Rail Europe (GRE) manages over 30,000 railcars [12] - GATX Rail India manages over 10,500 railcars [12] - RRPF owns 427 aircraft spare engines [12] - GEL owns 39 aircraft spare engines [12] - Trifleet manages over 25,000 tank containers [12] Financial Highlights - Over the past decade, GATX has returned more than $14 billion to shareholders through dividends and share repurchases [23] - GATX's Income Per Diluted Share, excluding tax adjustments and other items (non-GAAP) was $789 in 2024 [25] - GATX's Return on Equity, excluding tax adjustments and other items (non-GAAP) was 12% in 2024 [27] - GATX invested $1674 million in 2024 [29]

GATX Conference Call Summary Company Overview - GATX has been in operation for 127 years, originally starting as a railcar leasing company in 1898 and currently focusing on railcar leasing, aircraft engine leasing, and container leasing in the Netherlands [2][3] Competitive Advantages - GATX operates as a full-service operating lessor with over 800 customers in North America, providing a highly diversified fleet and maintenance services, which enhances asset knowledge and customer reliance [4] Recent Acquisition - GATX announced a joint venture with Brookfield Infrastructure Partners to acquire Wells Fargo Rail's assets, including 105,000 railcars and 400 locomotives, with GATX as the controlling partner [6][7] - The joint venture structure allows GATX to maintain financial flexibility while controlling the assets from day one [11] Financial Outlook - The acquisition is expected to be modestly accretive in the full year after closing, with more material contributions anticipated beyond that [15][17] - GATX aims to diversify its fleet further and enhance customer service through operational efficiencies [19] Market Trends - The North American railcar leasing market has seen a shift towards leasing, with class one railroads reducing ownership to about 14-15% of the total railcars [21][22] - In Europe, government initiatives are pushing for a shift from truck to rail, which is expected to drive demand for railcars [23] International Growth - India presents significant growth potential due to its industrialization and infrastructure needs, with expectations of adding 800-1,000 wagons annually [56][58] - GATX's European operations face challenges due to economic conditions, particularly in Germany, but opportunities for growth remain [52][60] Engine Leasing Business - The engine leasing segment has shown strong performance, with high utilization rates and substantial future demand for aircraft engines [62][64] - GATX plans to invest approximately $1 billion through its joint venture with Rolls Royce this year [64] Capital Allocation Strategy - GATX prioritizes capital deployment in the highest risk-adjusted return opportunities across all markets, maintaining a strong balance sheet and investment-grade credit rating [70][71] - The company has a history of returning excess capital to shareholders through dividends and share repurchases [72] Secondary Market Activity - The secondary market for railcars remains robust, with high demand and competitive bidding, allowing GATX to be selective in its purchases [38][41] Conclusion - GATX is well-positioned for growth through strategic acquisitions, a focus on operational efficiencies, and capitalizing on market trends in both North America and internationally [55][70]